Brown and Secretary, Department of Family and Community Services

[2003] AATA 950

Administrative

Appeals

Tribunal

 

DECISION AND ORAL REASONS FOR DECISION [2003] AATA 950

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2003/29

GENERAL ADMINISTRATIVE  DIVISION		)
Re		MELINDA BROWN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Senior Member WJF Purcell

Date5 September 2003

PlaceAdelaide

Decision For the reasons given orally at the Hearing of this matter, the Tribunal affirms the decision under review.

(Signed)

WJF PURCELL
  (Senior Member)

CATCHWORDS

SOCIAL SECURITY - pensions, benefits and allowances - Family Tax Benefit - whether the applicant was overpaid Family Tax Benefit – whether there are grounds to waive all or part of the debt.

A New Tax System (Family Assistance) Act 1999 Schedule 3

A New Tax System (Family Assistance) (Administration) Act 1999 section 71

Secretary, Department of Social Security and Chaplin (AAT 5823, 12 April 1990)

ORAL REASONS FOR DECISION

5 September 2003   Senior Member WJF Purcell           

1.      This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 25 November 2002, which affirmed the decision of an Authorised Review Officer of 4 October 2002, to  raise and recover an overpayment of Family Tax Benefit made to the applicant for the 2001/02 tax year in the sum of $780.80.

2. The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents), together with an exhibit tendered by the applicant. The applicant appeared on her own behalf and gave oral evidence. She was assisted by her father, Mr Sexton. Mr Goldsworthy represented the respondent (the Department).

3.      The applicant was paid Family Tax Benefit in the 2001/02 tax year from 1 July 2001 to 8 November 2001 inclusive, on the basis that she was a single person with one child in care, Seamus, during the stated period.  Her rate of Family Tax Benefit during this period was not subject to an income test, as she was a sole parent receiving Parenting Payment Single.

4.      The A New Tax System (Family Assistance) Act 1999 (the Act) provides in Schedule 3 that an individual's adjusted taxable income is relevant to the rate of Family Tax Benefit and childcare benefit. Section 3 of Schedule 3 of the Act provides:

“(1)For the purposes of this Act (other than Part 4 of Schedule 1), if an individual is a member of a couple, the individual’s adjusted taxable income for an income year includes the adjusted taxable income for that year of the individual’s partner.

(2)For the purposes of Part 4 of Schedule 1, an individual’s adjusted taxable income for an income year is:

(a)       the individual’s adjusted taxable income for that year; or

(b)the adjusted taxable income for that year of the individual’s partner if it is less than the individual’s adjusted taxable income for that year.”

5.      The applicant commenced a marriage-like relationship with her now husband, Nathan Brown, on 9 November 2001.  From 9 November 2001 to 12 November 2001, her Family Tax Benefit rate was calculated using her estimate of a combined income of $41,314.  From 13 November 2001 to 29 April 2002 the applicant’s Family Tax Benefit rate was calculated using her estimate of combined income of $40,314, and from 30 April 2002 to 30 June 2002 her Family Tax Benefit rate was calculated using her estimate of combined income of $58,314.  The applicant said in evidence that her partner had been working away from home, and when he returned she realised that his income for the year would be higher than her earlier estimates, and informed Centrelink immediately.  The applicant’s and her partner’s actual combined adjusted taxable income for the 2001/02 tax year was $47,390.  The applicant had been paid $4,928.80 for the 2001/02 tax year, and was only eligible for a lower rate of Family Tax Benefit of $4,148.00.  The excess is $780.80.

6. A delegate determined on 28 August 2002 that the applicant had been paid $780.80 more than her correct entitlement, and a debt was raised under section 71 of the A New Tax System (Family Assistance) (Administration) Act 1999..  The applicant applied for a review of the decision on the basis that the law was not correct in taking into account her partner’s income for the full year, rather than only that portion of his income from that part of the income year after they became partnered.  The decision was affirmed by an Authorised Review Officer on 4 October 2002, and by the SSAT on 25 November 2002.

7. At the hearing, Mr Sexton provided lengthy written submissions which I have taken into account, and which are attached to these Reasons for Decision as an annexure. He spoke to those submissions, and summarised his argument in his final address to the effect that he maintained that as soon as a person enters a relationship, that person will incur a debt because the whole of the partner's income will be taken into account, and not only the income earned during the year whilst they are together. In addition, section 3(1) of Schedule 3 of the Act does not cover the applicant's situation of partnering part-way through a financial year. Section 3A of Schedule 3 of the Act covers the situation where individuals cease to be members of a couple, and section 2(2) of Schedule 3 of the Act covers the situation where an individual dies. The Tribunal should look therefore at the Act as a whole and its purpose, and interpret section 3(1) of Schedule 3 of the Act to take into account the pro rata adjustment of income.

8.      The Department contends that as part of the Government's plan for a new tax system, the structure and administration of family assistance was altered with effect from 1 July 2000.  The family assistance law is contained in the legislation, the Act and A New Tax System (Family Assistance) (Administration) Act 1999..  Under the family assistance law there is one set of rules for all families regardless of how they choose to receive family assistance.  For Family Tax Benefit this means that regardless of whether families receive fortnightly payments, or as an end of year lump sum claimed with their tax returns, they will all be subject to the same eligibility criteria, rate calculators and administrative arrangements under the family assistance law.

9. The Department maintains that the family assistance law provides options for recipients who may claim for a current period by instalments, by providing income estimates; or claim a lump sum for a past period. When actual adjusted taxable income becomes known, a Secretary initiated review is triggered to determine the correct entitlement by way of reconciliation. If a recipient has been underpaid, they receive a top-up payment. If a recipient has been overpaid, a debt is raised. Section 3(1) of Schedule 3 of the Act provides that “the individual's adjusted taxable income for an income year includes the adjusted taxable income for that year of the individual's partner”. It does not speak of pro rata adjustments for part of an income year. An “income year” is defined in section 3(1) of Schedule 3 of the Act as having the same meaning as in the Income Tax Assessment Act 1997, and means a full financial year, and not part of a year.  The applicant was paid $4,928.80 and after reconciliation was entitled to $4,148, thus she was overpaid $780.80.  The legislation has been applied correctly.

10. It is clear that Mr Sexton and the applicant consider that the legislation has been applied harshly, and that the decision-makers have not taken into account the applicant's particular circumstances. The terms of the legislation however are specific, and no reference is made in the balance of Schedule 3 to the taking into account of a pro rata formula. Section 2(2) of Schedule 3 of the Act covers an individual dying. Section 3A of Schedule 3 of the Act covers the situation of members of a couple separating during an income year. Parliament has chosen not to provide a formula to cover specific situations such as the applicant's. In her circumstances the legislation has produced an unfortunate outcome. She provided estimates of adjusted taxable income between 9 November 2001 and the end of the financial year; and on 30 April 2002, having realised upon her husband's return, that the estimates were no longer accurate, she increased her estimate from $40,314 to $58,314, thus ensuring a lower rate of payment between April and June 2002, and thus avoiding the incurring of a larger debt than $780.80.

11.     In the matter of Secretary, Department of Social Security and Chaplin (AAT 5823, 12 April 1990), the Tribunal said at paragraphs 25 and 26:

“25.     Having made these comments, it is not open to the Tribunal to decide this application upon sentiment but rather upon an interpretation of the sections.  Likewise-

“if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust.  To say this is not to insist on too literal an interpretation, or to deny that the court should seek the real intention of the legislature.  The danger that lies in departing from the ordinary meaning of unambiguous provisions is that ‘it may degrade into mere judicial criticism of the propriety of the acts of the Legislature’, as Lord Moulton said in Vacher & Sons Ltd v London Society of Compositors (1913) AC 107 at 130 it may lead judges to put their own ideas of justice or social policy in place of the words of the statute”.

(Per Gibbs C.J. Cooper Brookes Wollongong Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 305).

26. Despite the Respondent urging me to decide the application pursuant to section 15AA of the Acts Interpretation Act 1901, I cannot discern any ambiguity and in those circumstances, it is not open to the Tribunal to invoke that Act.”

12. In my view section 3(1) of Schedule 3 of the Act is not ambiguous, it is specific and for the purposes of the Act, the applicant's adjusted taxable income for the year 2001/02 included the adjusted taxable income of her partner. I consider that the legislation has been applied appropriately, and a recoverable debt has arisen.

13.     There must be many couples in the position of the applicant and her partner, but Parliament has chosen not to address their circumstances.  Mr Sexton’s anger however, is not directed towards Parliament or the Parliamentary draftsmen, but towards the decision-makers in Centrelink, the SSAT, and this Tribunal, who are unable to “fill in the gaps” and achieve the result for which the applicant contends.  If the income for the 2001/02 year could be adjusted to cover only the period that the applicant was partnered, the adjusted taxable income would be reduced by about 25%, thus reducing the likelihood of an overpayment arising.

14.     The legislation has achieved an unfair result in the applicant’s circumstances, but as I pointed out in the course of the Hearing, I can allude to this lack of fairness, but any amendment must be approved by Parliament; and Mr Sexton and the applicant may choose to raise their concerns with the Minister for Family and Community Services, or with their Federal Member of Parliament.

15.     For these reasons the Tribunal affirms the decision under review.

I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member WJF Purcell

Signed:         .......................................................................................
  Associate

Date of Hearing  5 September 2003
Date of Decision  5 September 2003
Counsel for the Applicant         In person
Solicitor for the Applicant          -
Counsel for the Respondent     Mr C Goldsworthy
Solicitor for the Respondent     Service Recovery Team